Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please explain step by step a ) Calculate the net present value of the investment, which for the first three years brings a positive flow

Please explain step by step a) Calculate the net present value of the investment, which for the first three years brings a positive flow of PLN 2,600 at the end of each year, while the following year brings one flow of PLN 1,800 in mid-year (in the mid of 4th year). The investment amount is PLN 7,500 now. Assume an interest rate (cost of capital) of 8%.[Hint: 1.08^3.5=1.3091](3 points)
b) Please also provide the discounted payback period for this investment. (2 points)
c) Comment the results obtained in a) and b) and the entire investment. (2 points)
d) What amount of investment would give the same NPV as in a) if the investment would bring PLN 2,800 annually for 3 years (only).(3 points)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investments

Authors: Zvi Bodie, Alex Kane, Alan Marcus, Stylianos Perrakis, Peter

8th Canadian Edition

007133887X, 978-0071338875

More Books

Students also viewed these Finance questions

Question

What does the start( ) method defined by Thread do?

Answered: 1 week ago